In order to study the rules of load transfer between reinforcement and soil in reinforced earth retaining wall with sandy cobble, the reinforced soil was considered as composite materials in which soil and reinforced belt was regarded as matrix and reinforcing material, respectively. The soil around the reinforcement was separated into the interface layer and the effective influence layer under axial load. Based on the hypothesis that the additional shear stress produced by the reinforcement turned to linear attenuation in the effective influence layer, we modified the traditional shear-lag model and established the stress equilibrium differential equation for the reinforcement, from which attained the axial stress analytical solution of the reinforcement. After comparing with the drawing test data, we found that the theoretical derivation was in accordance with the test results. According to the research, the axial stress of reinforcement increases firstly, and then decreases along the reinforcement length l, which shows parabolic-shaped distribution; and a maximum value appeared at a distance less than l/2 from the wall. The soil close to the reinforcement appeared banded effective influence layer, and the additional shear stress caused by the reinforcement in the effective influence layer turned to attenuate linearly along the normal direction.